Patent Reform Act suffers serious setback, stalled in Senate

Attempts by Congress to update the US patent system have run into a snag, …

The US Senate has been considering some major changes to the US patent system, but opposition to some provisions in the complex legislation has apparently derailed the effort, at least temporarily. The Senate version of the Patent Reform Act (S1145) has been taken off the schedule, meaning it will not be considered by the full Senate any time in the near future. That doesn't mean that it can't be revived at a future date, but the bill seems to have drawn some opposition at nearly every step of the way, so its passage will likely remain a challenge.

As we discussed in our detailed analysis of the bill, the US patent system is in some dire need of modernization and other changes. The most obvious problems are in the area of damages, where rulings have held companies liable for damages that, when trebled due to "willful" infringement, can be crippling. But there are other problems as well. The US patent system doesn't always align well with those used by our major trading partners, and has a tendency to grant patents on basic ideas, such as software techniques and business practices. The process for getting a patent overturned is also cumbersome, and has increasingly forced the court system to set standards for patents.

The legislation being considered doesn't fix all of the issues with the system, but it does make some major changes in damage awards. Damages would be proportional to the actual value of the infringing item, and the standards for willful infringement would be tightened. It would also simplify the process of re-evaluating patents after they have been granted, reducing the role of the legal system in the process. Beyond the actual changes, its passage would also signal that Congress takes patent reform seriously and can manage to actually pass legislation on a high-stakes issue, which may make it easier to pass future reform.

As things stand, however, the Patent Reform Act's slow progress has been a lesson in the challenges this sort of legislation faces. The House passed a version of the bill back in September of last year, but the Senate didn't get around to introducing its version until this April. Although it was introduced by a bipartisan group of eight sponsors, it has yet to make it out of the Judiciary Committee, where its presence has set off an apparently frustrating debate. “I am disappointed that just a handful of words have stalled the Senate’s debate on this important patent legislation," committee chairman Patrick Leahy said in a statement last month, "I have said repeatedly that the time for patent reform is now. Unfortunately, some have yet to fully grasp this fact, and have stalled meaningful reform."

That stalling should come as no surprise, as there are a lot of industries with significant interest in the outcome of this legislation. Some groups, such as patent lawyers and pharmaceutical companies, are perfectly happy with the current system, and hope to see little change. High tech firms are hoping to limit being on the hook for catastrophic damages, while maintaining the value of their patent portfolios. Legislators are undoubtedly getting many mixed messages from a horde of lobbyists, meaning they are likely to tread slowly and cautiously into patent reform, if at all. For now, it appears that this means the bill will be need longer in the Judiciary Committee before it can be considered by the full Senate.